Alarming to read reports about how Wall Street was touting BP stock after the oil spill disaster.
Credit Suisse, Morgan Stanley and Citigroup were among the main culprits urging investors to buy in. Of course, that screwed the investors because BP kept sinking. The news report says: "All told, 27 of 34 analysts tracked by Thomson Reuters rated the stock "buy" or "outperform" as recently as May 11. The other seven rated the shares "hold." There was not a single rating of "sell" or "underperform" among those tracked."
How could this happen? The answer is simple, it's all about conflicts of interest in share markets. BP is a huge securities issuer. The oil company is one of Wall Street's larger underwriting customers. The company sold $38 billion of debt over the past five years, generating hundreds of millions of dollars in fees for these investment banks. The top underwriters were UBS and Credit Suisse, both of which rated BP shares a "buy" in May after the disaster.
The BP disaster shows why the rules need to be cleaned up. At the very least, investment banks recommending the stock need to disclose their business links with BP and Big Oil.
If nothing else, the revelations show us the total amorality of share markets.
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